More Patents That Have Touched Both Intellectual Ventures And Ocean Tomo Showing Up In Lawsuits

from the this-is-not-good dept

Last year, we noted that more and more patents previously held by Intellectual Ventures were showing up in lawsuits -- with rumors swirling that IV still got a cut of money collected on at least some of those patents. Then, in December, IV finally filed its first patent infringement lawsuits directly. However, more of its "former" patents are popping up in lawsuits as well. Joe Mullin has the details of yet another secretive shell patent holding company, called Pragmatus, that has some former IV patents and sued Facebook, YouTube and Linkedin last year, and now is suing basically all of the cable industry, claiming that its patents (5,581,479 and 5,636,139) cover the rather broad concept of video-on-demand.

What's equally interesting (and/or troubling, depending on your point of view) is that these patents also passed through Ocean Tomo, the favored tool of laundering patents by auctioning them off. For years, we've questioned the claims of Ocean Tomo that it's really just helping to establish a "market" to extract the value of patents. In reality, it seems that it's created a tool for putting a massive tollbooth on innovation, taking broad and useless patents (i.e., patents that really don't teach anything new or non-obvious at all) and putting them in the hands of lawyers who sue companies who actually innovate. It's worth noting that the patents that IV used in its own lawsuit last year also appeared to travel via Ocean Tomo (it appears that's what AUCTNYC8 really is).

Once again, the deeper you dig into these stories, you realize that it's really just a bunch of lawyers passing around patents to figure out who can sue companies who actually do stuff. This is why it's frustrating when the press falls for IV's ridiculous spin about how it's really inventing things. As far as we can tell, nothing "invented" at IV has hit the market in any meaningful way in its many years of existence. But a bunch of the patents that it has bought and sold over time are being asserted against a wide range of companies who actually do innovate. I'm really at a loss as to how anyone can look at this setup and claim the system is working. The system seems to simply be a way to extract money from companies that actually innovate and give it to a bunch of lawyers who think this is all a big game.

I recall statements made by or on behalf of the founders of Intellectual Ventures that the patents they were aquiring were going to be used for defensive purposes only. Many people at that time were skeptical of these claims. I suppose if I looked, I would find evidence of this - but I'm too lazy at the moment.

Ocean Tomo does create a market. Like it or not, there is plenty of value to be found in broad, defensible patents which cover areas of current use.

Extracting value in a patent comes in a few ways: building a product yourself, licensing it out to others, or in litigating those who violate the patent. When the first two points don't work out (for whatever reason) the third is where the value is.

The original inventors have been paid and moved on to other stuff, and so on down the line. Money has been invested, and these people are there to extract the maximum value for it. It is a little like a lottery, they will likely go through a series of cases that get thrown out, but one or two will stick and turn the situation profitable. In the mean time, the original inventors have already been paid off, and the cycle of development begins again.

as the hitch hikers guide to the galaxy says

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You missed the part about "non-obvious" and "broad". Have you read these patents? They never should have been issued in the first place. So this "market" is really just a way to make blanket claims on things that either already do exist or should be so obvious that it's un-patentable, and sue the pants off of the people actually doing something.

Can and should a patent holder defend themselves when they're infringed? Yes. Sure. Should cable companies all be sued over On-Demand technology & methodology years after it's in use because the patent [sic] finally got in the hands of people who want to make money off the suit? No.

Go read those patents... how can anyone but a rubber-stamp-jockey defend the idea of patenting the central distribution of digitally stored data kept in a data-block format through a menu system?

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This might be true if the patents in question described actual useful innovations.

Unfortunately in these cases the "original inventors" are all two often lawyers themselves - who haven't invented anything at all, but who simply know the system well enough to craft carefully obfuscated patents that describe (or can later be claimed to describe) obvious broad concepts in various lucrative fields. They file these dozens at a time, knowing the overworked USPTO will let a least a few of them through - then use them to extort money from legitimate innovators.

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"Ocean Tomo does create a market. Like it or not, there is plenty of value to be found in broad, defensible patents which cover areas of current use."

Of course. But the stated purpose of patents is "to promote the progress of science and the useful arts". This behaviour clearly DOES NOT promote any progress at all, it only hinders it, and makes me question why does the patent system exist at all if it allows such a destructive behaviour.

bad patents can be reexamined

Anyone can request that a patent be reexamined by the patent office. This choice is not cheap, but would typically be far less costly than full blown litigation. For example, the USPTO charges roughly 2500 and a patent lawyer would likely charge anywhere from 1500 to 7000 to conduct an invalidity search and to prepare the actual reexam request depending on the complexity of the technology involved and the difficulty in conducing the prior art search. Compared to potentially tens if not hundreds of thousands of dollars for litigation, this is a pretty good deal.

The 2007 KSR decision from the supreme court changed everything. It is now far easier to argue that a patent is invalid as obvious. Any patent granted prior to the KSR decision is certainly vulnerable to being severely limited, if not invalidated outright, in a reexamination proceeding.

strange file history

These patents were originally filed back in 1993. Any discussion of prior art or obviousness must be made in light of this date. Also, '479 patent lists numerous patents and non-patent publications which suggests that the patent claims were compared to numerous sources of prior art. This of course assumes that the patent examiner was both competent and diligent.

However, a look at the file history suggests that the examiner might not have been that competent. In normal circumstances, a patent examiner will issue a non-final rejection (for anticipation and/or obviousness) in the face of prior art. After a non-final rejection the applicant has the option to argue against the rejection without narrowing the claims or accept the rejection and narrow the claims to avoid the prior art. If the applicant elects not to narrow the claims and successfully argues against the rejection, the examiner must either allow the claims or issue a new non-final rejection. However, if the applicant elects to narrow the claims, the examiner must either allow the claims or issue a final rejection.

In this case, the Examiner issued three non-final rejections and zero final rejections. The fact that there were three non-final rejections indicates that the applicant successfully argued against the rejections without ever having to narrow the claims. It has been my experience, that such an outcome only occurs when the examiner was incompetent and issued lousy/unsupportable non-final rejections. The actual rejections and responses thereto are not available in electronic form so a more thorough review cannot be conducted without more effort, but this peculiar sequence of non-final rejections makes me very suspicious (without even looking at possible prior art) that this case did not receive adequate examination.

A new take on an old saying...

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You sort of miss the point.

There are a few ways to "advance" what is in a patent. You can build it yourself, you can license it to someone else to use, you can sell the patent outright to someone else, or you can wait and sue anyone who tries to use it.

Ocean Tomo is a clearing house for the third situation, making a market for patents. That is where most patent holders (normally creators) stop, because that is their range of interests.

What the buyers do with the patent is a completely different game. Many of them choose to use the fourth option (litigation), especially on patents that are broad in nature. Considering the amount of prior art cited in the application, they appear to have done a very good job at covering most of what would have been out there at the time.

You have to remember, what is overly broad today may not have been so obvious in 1993. The 17 year term (from issue) which will expire next year takes care of that issue going forward. That is why patents aren't like copyright, they don't last 70+ years.

Remember too that Acacia has most similar video style patent cases before:

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"There are a few ways to "advance" what is in a patent. You can build it yourself, you can license it to someone else to use, you can sell the patent outright to someone else, or you can wait and sue anyone who tries to use it.

Ocean Tomo is a clearing house for the third situation, making a market for patents. That is where most patent holders (normally creators) stop, because that is their range of interests."

I will argue that point... your third way does not 'advance what's in a patent’; it takes advantage of a system in a way not originally intended in its creation.

The original patent system was never intended for an inventor to have a way to become rich or make money by suing infringers. But non-interested (and by that, I mean they never invent anything or encourage development) lawyers and, now, corporate owners have started using that facet of the system to get rich.

I get what you're saying... the system allows it so that's they do this... but how can you defend the act itself?

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The original patent system was never intended for an inventor to have a way to become rich or make money by suing infringers.

I agree, it isn't the intention, but by the nature of the US legal system, it is the alternative. When you are granted certain rights, you have the legal right to protect those rights. If you are granted rights to a property and someone else takes it, your recourse is through the courts.

The lawyers are looking at the third step, which many inventors use, which is the outright sale of the patent. The inventor / holder has no interest in legal action, they are only trying to obtain some return on their investment (time and effort to invent and patent something, whatever it is). The lawyers after purchasing the patent can decide to sue if they think they have a valid enough situation to work from.

In the end, when society grants certain rights, they also grant certain types of recourse in the event that these rights are violated. You cannot have one without the other.

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But society didn't grant those rights... legislators did. I seriously doubt that the creators if the patent laws wanted to protect the process of selling the ability to sue over infringement.

Is that what evolved out of it? Obviously. And that's what we're saying needs to change.

Let me give you an example of how this has perverted the intent. I live in Florida. Here, if you illegally enter my house, I can resort to lethal force because it's automatically assumed that you are intending to do me harm. Now, let's say I just don't like you. I invite you over or somehow trick you into entering my house. All I have to do is kill you and make it look vaguely like you entered illegally. I am now protected against any legal action against me because it was 'justified self defense' and I am also protected from civil action from your survivors and family.

The law was drafted to protect residents from home invasion, but can be perverted to allow for protected murder. It's a loophole. Now, would you defend that loophole and say "yeah, he murdered, but the law allows for it."?

Extreme example? Sure. But it illustrates that just because the law allows for it, it doesn’t mean we shouldn't shun those who exploit it and try to fix the system.

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But society didn't grant those rights... legislators did.

Who gave the legislators the ability to grant those rights? the electors, aka society.

Your "florida" example is nice and all, but you fail on a few simple points. First, if the person is someone you know, police would likely investigate. They would likely find you having discussions with them (damn cell phones, text messages, emails, facebook... they all leave traces).

In the end, you would be charged with murder. The is no "loophole", only lies and deception to try to avoid it.

It isn't en extreme example, it is an unlikely example.

Technically, if you drive you car fast enough, the police won't be able to catch you for speeding because they can't drive that fast, and if you are close to state lines it might move into another state that can't actually stop you and all that other stuff. You could add a Romulan cloaking device and be double safe.

See... I can create extreme examples too. Doesn't make them valid, just makes them silly.

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And none of them answer my question about defending the exploitation of loopholes.

If you want to pick apart examples (no matter how extreme), fine. You're at my front lawn and armed, I incite you to chase me into my house. Boom. You're dead, I'm defended. Period. It doesn't matter what caused you to enter my house under Florida law; you're there, you're dead, I'm safe. Loophole. (yes, one I think needs to be closed).

I'm not versed in traffic laws and jurisdictional rules, but I'd think that speeding across state lines would just hand the chase off to the state you're entering. If you're fleeing a felony, I think they can cross state lines anyway, but I'm not 100% on that.

Pedantic nitpicking aside, you're defending the exploitation of a loophole that was never intended to be there. You're defending the actions of lawyers who are getting rich off other people, when they have nothing to do with the creative process at all. You're defending the creation of companies for the sole purpose of buying and selling patents so that the new owners can go sue people.

As I said before, the purpose of the patent system was never to provide people to make their money by suing... the suit was a way to protect the use of the technology for a short time to recoup the cost of creation. Now that this is what’s being done, the system needs to be fixed to close that loophole.

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What you see as a loophole isn't a loophole at all. It just the justice system at work. You are granted rights (the right to own your house, or to walk down the street). When those rights are violated, you have legal recourse. In granting a patent, there are rights, responsibilities, and recourses that come with it.

Calling the justice system a loophole is a pretty big jump, even for you.

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So we have a lot of patents that are filed to cover generalities and probably never should have been granted in the first place... by people who don't actually do any innovation or creation with those patents... and now a market who's sole purpose is to trade those patents, patents who's only value at that point is in litigation... and you don't see a problem here?

They patent a generality, don't do anything with it, and sue the first person who actually does the innovation. This is 'just the system at work'?

You still fail to address the point that these people are engaging in this to use the system for exploitation rather than innovation. Go read the patent litigation around RIM and the Blackberry and tell me that the 'owner' of the patent was following what the system was supposed to do.

I'm not calling the justice system a loophole... I'm saying that the ability to commercially transfer litigation rights of IP has created a loophole that is being exploited for financial gain.

Producing an invention = success

How about all the failures by companies who cannot produce inventions? Their success is based on ripping off and combining others inventions into products.

Some peoples skills are inventing. Many more people who lack the ability to invent are good at having something made and marketing it. Yet they could not have made the product all all if not for inventors.

So the truth in all this is that the failures are marketing hucksters. They are unethical parasites.

Producing an invention = success

How about all the failures by companies who cannot produce inventions? Their success is based on ripping off and combining others inventions into products.

Some peoples skills are inventing. Many more people who lack the ability to invent are good at having something made and marketing it. Yet they could not have made the product all all if not for inventors.

So the truth in all this is that the failures are marketing hucksters. They are unethical parasites.

Beter late than never

"Should cable companies all be sued over On-Demand technology & methodology years after it's in use because the patent [sic] finally got in the hands of people who want to make money off the suit? No."

While there is some competition between players in industries they also collaborate. It is common for all players in an industry to try and starve inventors into giving up. They collectively use inventions while counting on inventors to not be able to get a backer with the resources to sue. It often takes inventors 5-10 years to find a partner with the resources and will to defend their patent property rights.

They are a Patent Pirating company's worst nightmare:)

"Unfortunately in these cases the "original inventors" are all two often lawyers themselves - who haven't invented anything at all,"

Think about this carefully. Patent attorneys have an engineering or scientific degree first followed by a law degree. Then they spend years prosecuting patents and in the process learn diverse disciplines.

They are naturals for becoming inventors, and I think we all can agree that being an inventor is a higher skill and has more social value than being just a lawyer.

Their lawyer skills likely mean they produce much higher quality patents which enhances their likelihood of prevailing over those who steal others inventions. They are a Patent Pirating company's worst nightmare:)

Dear Mr. Riley

First, thank you for giving my posts attention. That you argued 3 of my posts is quite flattering. Especially considering such an impressive signature.

Now, allow me to rebuke...

#25: "And your qualifications to make this determination are?"

I'd say my qualifications for that determination would be the commonsense I was gifted with. And if an inexperienced outsider thinks that an item is so obvious that it shouldn't be granted a patent...

I didn't say that the patent should never have been issued because it failed some technical aspect of the filing process or did not properly outline a technology in the right terminology. I fail to see how I have to have some kind of degree to apply common sense.

We're talking about a system of storing data in a block-format and retrieval through a menu-like table of contents... You know, I think I need to go turn in my Wii as it appears to violate that patent.

And, do correct me if I'm wrong, but isn't the burden of proof on the applicant to show their requested patent is not an obvious idea? If that's the case, feel free to show how this was not obvious. I know it's not your patent, but you did defend its validity.

#26: "Some peoples skills are inventing. Many more people who lack the ability to invent are good at having something made and marketing it. Yet they could not have made the product all all if not for inventors.

So the truth in all this is that the failures are marketing hucksters. They are unethical parasites."

And how does this apply to the RIM Blackberry issue years past? Someone had a patent that covered a very broad idea (so broad that many besides me thought it shouldn't have been issued) and did nothing with it. Another company had the same idea (it was broad, after all) and actually did something with it. They had their own invention, but were sued because their broad idea ran close to someone else's broad idea. How was invention protected there?

“They are all unethical parasites”… that’s a pretty broad stroke to apply to so many people who fail to invent. It honestly concerns me that you would make such a statement right above all the groups you affiliate with. And it’s an opinion as well… one that I will now equate to you as well as the groups you represent. You don’t mind if I use this quote that all failures to invent are unethical parasites when discussing the various groups you represent, do you?

Well, I have an opinion too: The lawyers who go out and buy up patents for the sole purpose of litigating against people who come up with a similar idea; those are the unethical parasites. But, that’s just my opinion.

#28 "Justice delayed is justice denied, but better late than never."

Yes, I agree that an inventors 'day in court', as it were, is better late than never. However, much like the person I was actually discussing this with, you fail to address the core of my problem... how is this 'justice' if the people who now hold the patent and have the resources to pursue this had no hand in the invention? That's not justice, it's profiteering. Now, feel free to address the 'justice' of a market based on the buying and selling of patents for the sole purpose of litigating them.

#30: "Once again you are wrong, because the only recourse patent law gives an inventor when someone steals their invention is to recover damages and to get an injunction."

I debated grouping this in with my last one, since I'm going to give a very similar response, but since this one attacked me based on my status as Insider (something I fail to see as related, more as an ad hominim attack), I thought "eh, what the hell..."

If I'm wrong, you failed to state why. You said that litigation is the only legal recourse for an inventor against one who steals their invention. Ok, I agree with you on that... I never said otherwise. But this doesn't answer my statement that the original intended purpose of the patent system was not to provide a market to buy and sell that ability to sue.

I say "[A] was not the original purpose". You say in response "[B] was the original purpose". So it seems we're in agreement. Thank you for backing me up.

In closing, Mr. Riley, I think you didn’t think this one out too clearly. Just because I’m not a lawyer or a patent expert does not mean that my arguments are invalid. You come in here with an impressive resume, claim that I and others are wrong, and fail to show why. You also may want to check the condescension at the door… many around here see (smell?) that as blood in the water. I’d argue that I restrained myself very well in my original response; others may not be so successful.

"What's equally interesting (and/or troubling, depending on your point of view) is that these patents also passed through Ocean Tomo, the favored tool of laundering patents by auctioning them off."

I find it remarkable that someone wrote / said this. I donated my rights to a patent (I am one of the inventors) to a company (Company C), which I also own part of...

Someone in Company C worked with Ocean Tomo to auction it off, without my consent. What I find interesting is how Mr. D from Company C gave a Press Release saying that it should sell for no less than $500,000.00 (although the value is 100x more), then the same person wrote a letter saying that he placed a reserve price of $250,000.00. This same Mr. D., later on, showed an invoice from Ocean Tomo for $124,500.00.

First, I ask - how can ANYTHING be sold in an auction for less than its reserve price?

And whoever commented about 'patent laundering' with Ocean Tomo seems to be right. The patent rights were transferred to a new owner, a newly formed LLC in Delaware and after several inquiries, no one seems to want to step forward and claim ownership of this LLC company.

I wrote to Ocean Tomo and exposed what I know of this patent auction. I asked Ocean Tomo if they did their due diligence, specially concerning IP owned by non-US residents/nationals. I asked Ocean Tomo if they read the Corporate ByLaws and Shareholder Agreements of companies that claim to have an IP to sell, to make sure that whoever is claiming to have an IP to sell, is indeed authorized to sell the IP. I never received a response from Ocean Tomo.

What I think happened is exactly a LAUNDERING SCHEME. The patent could have sold for millions on the side and Ocean Tomo auction was used as a cover. It remains to be seen if Ocean Tomo is in on the action.

I submitted a declaration of revocation with the USPTO since I have the right to revoke the initial donation I made to the company.

I am not letting this go. It probably needs to be reported to the FBI as a financial crime...